Germany’s appeal to foreign investors hits lowest level since 2017: Survey

Germany’s attractiveness to foreign investors has fallen to its lowest level since 2017, a new survey by KPMG showed Wednesday, as high energy costs, bureaucracy and infrastructure weaknesses weigh on the country’s competitiveness.

The study, titled Business Destination Germany 2026, is based on a survey of 400 chief financial officers from major German subsidiaries of international companies in the eight leading investor countries.

KPMG’s location index, which compares Germany with other European Union countries across more than 20 factors, dropped to 0.2 points in 2026, down from 1.2 in 2023 and 3.1 in 2017 on a scale ranging from +10 to -10. The latest reading places Germany only slightly above the EU average.

Despite the decline, the country continues to benefit from its market size, public safety, political stability and innovation capacity, the survey said. Sixty percent of respondents said they use Germany as their European headquarters, while 63% also manage operations outside Europe from the country.

However, respondents highlighted structural weaknesses undermining Germany’s competitiveness.

Seventy percent of CFOs ranked Germany among the five weakest EU countries in terms of regulation, while 29% placed it last, making bureaucracy the most significant area of deterioration.

Energy costs were also a major concern, with 43% ranking Germany as the weakest location in the EU for competitively priced energy and another 26% placing it among the five weakest.

Digital infrastructure was cited as another weak point, with 69% ranking Germany among the five weakest countries in Europe. Perceptions of physical infrastructure also declined, while tax burden, complexity and immigration policy were viewed more critically than in previous years.

Still, the survey pointed to medium-term opportunities, particularly through government reforms, the energy transition, digitalization, demographic change, and planned investments in infrastructure and defense.

Nearly half of the companies surveyed, 48%, said they expect their economic situation in Germany to improve over the next five years, indicating that confidence in the country’s long-term fundamentals remains intact.